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ODEC Pulls Out Of Deal, Ending Utility Deal Saga

The
months-long saga ended Monday night when the Berlin Town Council voted
unanimously to discontinue negotiations for the controversial sale of the power
plant and distribution system.

Old
Dominion Electric Cooperative’s (ODEC) decision to back out of the deal over
environmental issues at the Berlin power plant property triggered the town
council’s decision to halt negotiations with Choptank Electric over the
distribution network as well.

“When
ODEC pulled out, that changed the dynamic of the whole deal and we could not in
good conscience proceed,” said Councilwoman Paula Lynch.

Berlin
Attorney Dave Gaskill said the town was legally allowed to end negotiations and
essentially kill the sale.

“It
was set up where each letter of intent was dependent on a consummated deal,”
said Gaskill. “The letter of intent entered into with Choptank is now
voidable.”

The
town was negotiating separately with ODEC and Choptank over the electric
utility assets, based on complex letters of intent signed last fall after a
straw poll of the townspeople narrowly approved the sale.

“A
lot of hours and thought went into this but we said the power plant and the
distribution system was a package deal, all or nothing,” Berlin Mayor Tom
Cardinale said.

The
dynamic changed financially, said Lynch, with the loss of the $1.5 million
plant sale price.

The
$9.5 million sale of the electric distribution system to Choptank Electric
would not have been enough to take care of the electric utility’s debt and
reduce electricity rates, Lynch said, which were the goals of the sale.

“To
do that, we needed a certain number of dollars,” she said.

Council
Vice President Gee Williams said both aspects of the system needed to be sold
to meet the town’s goal.

“The
sale was to accomplish both goals,” said Williams. “Only selling part of it
doesn’t solve the whole problem.”

ODEC
chose to nix the sale after an environmental report on the plant property
uncovered an old oil spill.

According
to the report of Berlin’s electric sale subcommittee, read by Lynch Monday
night, “ODEC is unwilling to assume any material environmental liability risk,
or any costs associated with remediation.”

Berlin
Finance and Operations Manager Joe Davis said the spill was news to the town.

“No
one at the plant had knowledge of that spill,” said Davis. “They’ve been unable
to put a time on it but it’s been many years.”

There
were hints earlier this year that ODEC was not happy with the deal, Lynch said,
but it was not until a conference call in late March that officials realized
the deal was dead.

“We
learned very late in the game, from ODEC itself, they had been a reluctant
member of this team, initially,” Lynch said.

Cardinale
feels the town did all it could to make the deal happen.

“The
deal didn’t go through,” said Cardinale. “We did all we could.”

ODEC representatives could
not be reached for comment.

Mike Wheatley, Senior Vice
President for Corporate Services for Choptank, said the company is
“disappointed” over the turn of events.

“We
felt like the deal was a good dead for the ratepayers of Berlin and also a good
deal for the Choptank membership,” said Wheatley. “We did what we could to make
the deal a reality. All along, we felt the Mayor and the Council did a good job
representing the townspeople.”

Wheatley
added, “For the most part, the deal [for the distribution system] was done, in
my opinion.”

Now
Berlin must move ahead and look for ways to make the electric utility pay for
itself, while reducing rates.

The
subcommittee report, in addition to halting the sales, recommended that the
mayor and council task the Berlin Utilities Commission (BUC) with generating
options on several dilemmas facing the town, from reducing electric rates to
whether or not to operate the power plant at all. The BUC will also be tasked
with looking at the electric utility as a stand-alone entity, run like a
business.

Sale
opponent Sue Beaman, who filed an unsuccessful lawsuit after the straw poll
seeking to have the results voided, said she was delighted that the sale had
been stopped.

“Most of us were shocked
that it had really happened,” she said. The retention of the electric utility
“gives us another opportunity to do a better job, a much better job.”

Opponent
Thom Gulyas, a Berlin resident and business owner, was also pleased the deal
turned south.

“I’m
extremely, extremely glad they had a change of heart and saw the writing on the
wall,” said Gulyas.

Gulyas
hopes the town sets up an enterprise fund, separate from town finances, which
the mayor and council cannot “ransack at will,” he said.

“We need to get some
outside management, get the BUC to oversee it, and run it like a business,”
said Gulyas.